The Azeri translation
of "Gunashli" means "sunny" and this offshore
field which is 100% operated by SOCAR is as important to the
Azerbaijani economy as the sun is to the people. Readers of this
journal will already be aware that the undeveloped deep water
part of the offshore Gunashli field forms part of AIOC's unitized
development along with the Chirag and Azeri fields. Less well
publicized, however, is the existing producing portion of Gunashli
which lies in 80/120 meter water depths as compared to the undeveloped
deep water Gunashli at 300 meters. Current production from Gunashli
is about 120,000 barrels or 16,000 tons per day. This production
is vital to Azerbaijan's economy as it comprises 60% of the total
production from all sources, both on and offshore.

Unfortunately, production has been falling steadily at a rate
of 9% a year for quite some time. The reasons are well understood
and SOCAR's technical experts have worked out recovery plans.
As usual, the problem is mainly lack of finances to maintain
the required drilling program and to keep the topside production
equipment up to the required standard. SOCAR have selected the
Norwegian / British engineering company Kvaerner to provide project
management services to SOCAR to rehabilitate Gunashli. The work
is funded by a $20.8 million World Bank loan for "Petroleum
Technical Assistance", part of which relates to Gunashli.

Gunashli is located 120 km east of Baku and 12 km to the southeast
of the Oily Rocks (Neft Dashlari) field. It was seismically explored
from 1958 to 1963. Further appraisal and drilling continued to
reveal a reservoir 12 km by 4 km. The first offshore fixed platform
was in place by 1976. It consisted of four jackets with the intention
of drilling 10 wells. In 1980, the oil produced from one well
was 320 tons per day. Presently there are 12 platforms with approximately
130 oil producing wells. In addition, there are several jackets
already fabricated but not yet installed which can be seen at
the SPS (Shelfprojectstroy) jacket fabrication yard at Qaradagh,
south of Baku.

The large number of platforms at Gunashli is typical of Caspian
developments to date which use conventional, essentially vertical,
drilling rather than a mixture of vertical and deviated forms
which is now standard. Oil is transported through a subsea pipeline
to Oily Rocks where associated gas is separated and transmitted
through a subsea pipeline to Oily Rocks where associated gas
is separated and transmitted to Qaradagh in the SOCAR Gas Compression
Plant constructed by Pennzoil in 1992. The crude oil is routed
from Oily Rocks to the Dubandi Oil Terminal on the Absheron Peninsula.
It is likely that a connection will be channeled into the "early
oil" export pipeline system. It is believed that commercial
reserves remaining in Gunashli are more than 100 million tons
and the quality of the oil is excellent.

A project team has been formed under the direction of Kvaerner's
Project Manager, Rolv Jesje, and SOCAR Project Director, Nazim
Aliyev. Project mobilization commenced in October of this year
and full activity began at the end of November. The development
plan is in three phases, Project Preplanning, Project Preparation
and Project Implementation. The total project duration is expected
to take 40 months and finance needs to be secured for costs could
be as high as $500 million. The goal is to double current production
rates. An early priority is to establish the viability of this
project before engaging in detailed financing discussions. This
ambitious project is SOCAR led, but they have an open mind toward
outside participation. Interest is already being shown by some
major foreign oil companies. The existing Gunashli field has
a distinguished history of contributing to Azerbaijan's economy
already, and with the rehabilitation plans, its future looks
even sunnier.